Questions tagged [macroeconomics]

Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.

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Laspeyres Price Index and Paasche Price Index of india [closed]

What is the value of Laspeyres Price Index and Paasche Price Index of india quarterly from 2011 to 2020
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Are there any behavioral macro models with rigorous micro-foundations?

I am looking for some paper that tries to establish rigorous micro-foundations the behavioral New Keynesian (or any other) macro models. This is surprisingly hard, most work on this topic (like De ...
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Would printing money be necessary for remedying macroeconomic problems such as underemployment and overindebtedness if trade was balanced?

Printing money is often touted as the solution to the macroeconomic problems faced by developed economies today, namely lacklustre GDP growth, public and private overindebtedness and underemployment. ...
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Easy introduction to Markov processes and dynamic programming [closed]

I am taking advanced macro course in Fall. Could you please advise me a simple introduction to Markov processes and dynamic programming? I mean easy. Thanks!
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Is there an empirical model for studying contemporaneous feedback relationships?

In a DSGE model, monetary policy shock (Taylor rule style) increases interest rate. So output and inflation falls, which feedback contemporaneously to the interest rate. Thus, interest rate ($i_t$) ...
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1answer
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Large National Debt by borrowing money from foreign sources

I have a question about the greater severity of large national debt caused by borrowing from foreign sources. I am reading a book about elementary Economics and am currently on a chapter discussing ...
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1answer
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The link between economic growth, inflation, interest rates and fiscal deficit

I want to ask a question about how economic growth, inflation, interest rates is linked to fiscal deficit. I was reading a book on introductory economics and the following passage came up: If a ...
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2answers
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Relation between budget deficit and inflation?

In Iran we have had a high inflation rate for several decades (usually above 20 percent). Some of the top economists of the country say that it is mainly because the government spending is ...
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Aggregate demand and Real GDP

I understand that aggregate demand is the demand for all goods and services in an economy. However, I later found out that aggregate demand and real GDP are calculated using the same formula, so does ...
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Does this model of housing economy have a name, and if so, what are the common critiques?

I've been thinking about housing and the problem of rent recently and I came up with a simple idea that I'd like to explore further: what if renting a property transferred some ownership over time? ...
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1answer
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Theoretical equivalence, experimental distinction between GDI and GDP

Forgive me if this is a naïve or redundant question, I'm about 24h into my study of economics--but I've been trying to research this question and can't figure it out. Why does the national spending ...
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1answer
111 views

GDP doesn't add up in FED data - why?

To visualise the formula: $$Y=C+I+G+NX$$ I downloaded the FED data and plotted it, only to discover the two curves progressively diverge (see chart below). What am I missing? thank you! $Y$ = https://...
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Controversy surrounding the Fiscal Theory of the Price Level (FTPL)

I recently started reading a draft of John Cochrane's book on the Fiscal Theory of the Price Level. In the preface he states that the "[...] theoretical controversies are over." However, ...
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IS-LM : monetary policy in SOE that exports inferior goods

If I follow the IS-LM model (or some derivative of it), a small open economy can really only use monetary policy to change GDP in the short term. According to the model (or one of its spin-offs), if ...
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1answer
203 views

Is there Modern Translation Book for Wealth of Nations?

Is there a New/Modern English Translation of Adam Smith "Wealth of Nations"? I cannot locate any online, it is a great read, just trying to understand it better. The old/classical style of ...
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1answer
132 views

Did Capitalism and Adam Smith Support a Central Bank?

Does Adam Smith and Capitalism support a Central Bank/Federal Reserve? I am trying to read through the book "Wealth of Nations" to understand. Having a central/regulatory figure dictate ...
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What is an 'economic reason'? in relation to marriage?

I'm taking a economic course over the break and with no prior experience with economics, I'm struggling with coming up ideas for a prompt in relations to why people marry. I thought the idea of ...
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Is there any macroeconomic model based on Olson's collective action theory?

I've recently learned about Olson's Collective Action Theory and I'm interested in mathematic models of economies that follow the theory's axioms. I tried finding a general equilibrium macro model ...
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1answer
48 views

Proxy for financial crisis

I'm trying to do some empirical work and trying to find a good proxy for the financial shock of 2008. My first idea was to consider the change in real interest rate between 2007 and 2008 but I don't ...
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When the LM schedule is vertical, a change in fiscal policy (government spending) only increases the interest rate. What’s the intuition behind this?

As the government spending increases, the aggregate expenditure increases. This results in the increase in income. Now in the money market as the income increases, transaction demand for money ...
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Overheating in Short Term Equilibrium

My text Economics by Hall, Lieberman, gives a model of $\text{AE}$ (aggregate expenditure) in the short term as a function of $\text{GDP}$, $\text{MPC}$ (marginal propensity to consume), and ...
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Help with derivation

I am trying to understand how the authors jumped from these two equations: $k^d=k^s$ $k^d=ln[\bar{l}\alpha^{\frac{1}{1-\alpha}}]-\frac{1}{1-\alpha}\tilde{R}$ $k^s=ln[\bar{l}(1-\tau)(1-\alpha)\alpha^{\...
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2answers
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Where we call GDP aggregate demand or aggregate supply in VAR models is our choice?

In the attached picture below, shocks associated with GDP are demand shocks and shocks associated with inflation are supply shocks. Here, shocks associated with GDP are rather supply shocks, and ...
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3answers
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What causes inflation?

Given the recent increases in the price of many things in the US (lumber, used cars, gasoline, etc…) I have begun thinking about what is going on at a macroeconomic level. My first thought is “it’s ...
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Do Non-Productive Investments Need to Be Written Down in GDP Accounting?

In this article, Professor Michael Pettis talks about how GDP can be overstated if non-productive assets are not written down. However, I've seen in a few places (in the comment section of the link ...
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1answer
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Differentiation in a inflation tax calculation

everyone. I am studying Advanced Macroeconomics, by Derek Leslie, and I am having some troubles in understanding the result of a differentiation in the Chapter 1, section 5. This section approaches ...
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Relationship between productivity and GDP

I was looking at the OECD data for GDP per hour worked as a stand in for productivity and was extremely confused when I started comparing the numbers and tried to understand the relationship between ...
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1answer
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National income value added method

I have a doubt in national income value added method I will tell you by example see I produced 5 kg wheat so national income is amount of wheat and I gave 3 kg wheat to my teacher as fees assuming no ...
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In VAR models, do variations in the variables come solely from shocks?

In DSGE models, if you shut all shocks to zero, then the variables have zero variations. Thus, they just equal their steady-state values for all periods. So the series for all variables are just flat ...
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2answers
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Which software can be used to estimate a non-recursive SVAR?

Which software can be used to estimate a non-recursive SVAR? Not sure though if this question belongs here but I found nothing so far on google. Or researchers using them do it manually?
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1answer
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New Keynesian Phillips Curve: log-linearization

I am facing some problems in log-linearizing the following equation: which is the New Keynesian Phillips Curve (NKPC). The expected result, once log-linearized, is: which is described by equation 46 ...
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In a deflationary recession, lower demand leads to lower prices. Does this contradict the law of demand?

In Principles of Macroeconomics (a free ebook available on openstax), the chapter on inflation says, regarding deflationary recessions: High levels of unemployment typically accompany recessions, and ...
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33 views

Difference between retail sales growth and consumption growth

In the comments in this article, professor Michael Pettis states that "By the way please do not assume that retail sales growth rates are a good proxy for consumption growth rates." I ...
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If a poorer country's currency appreciates equal to the dollar would their minimum wage decrease?

Currently $1 = 31.5 Thai baht, and Thailand has a minimum wage of 336 Thai baht/day (42 baht/hr). If the baht appreciates to the point where it is $1 = 1 baht would that 42 baht/hr minimum wage ...
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Why do firms reduce both price and supply during a recession?

Could anyone explain why firms reduce both price and supply of goods and services during a recession with a practical real life example for better understanding ?
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Market for loanable funds

Can anyone explain why in some textbooks a government deficit causes a shift to the left of the supply curve (Mankiw) and in others a shift to the right of the demand curve (Krugman). Furthermore,how ...
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1answer
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What are some negative/positive aspects from globalization in regard to developed countries?

I have read many articles on how globalization is helping developing countries, as more and more companies from developed countries have been moving their production oversees. However, as hard as I ...
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Kaldor's Theory of Income Distribution

I am referring to Kaldor/Keynesian theory of income distribution and I am having trouble understanding why the model won't work if marginal propensity to save of workers (S(w)) is more than the ...
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1answer
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About the 9 tests on Index number theory to evaluate the efficency of the different types of price indexes

Correct me if I'm wrong, I've seen a section in Wikipedia about Index number theory and I've understand it as "if an index x (Laspeyres, Paasche, etc.) satisfies all of this test, then it's 100% ...
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1answer
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King–Plosser–Rebelo Preferences and Additively Separable

The wiki of King–Plosser–Rebelo preferences says that the utility function has the multiplicatively separable form $$u(C, L)=\frac{1}{1-\sigma_{c}} C^{1-\sigma_{c}} v(L)$$ and "in the limit case ...
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what is 'mid-year estimate' in following chart?

If it is mid-year population then, why it is so less in comparison to 'total population'
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Representative Agent and Maximization

If there's a maximization of utility subject to a budget constraint-would it be always a representative agent model? Can it be heterogenous in some cases?
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India's exports and the rupee

There are several analyst asserting that a strong rupee would dampen India's exports, for example below article. Given that circa 80% of indian exports are invoiced in USD, why a strong local currency ...
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Derive and Decompose The Aggregate Elasticity of Substitution in CES Economy

The paper is Oberfield & Raval 2021. Consumers have standard Dixit-Stiglitz preferences consuming the bundle $$Y= \left(\sum_{i \in I} D_{i}^{\frac{1}{\varepsilon}} Y_{i}^{\frac{\varepsilon-1}{\...
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1answer
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Are there any notable exceptions to the Impossible Trinity theory?

I am referring to the theory presented on Wikipedia and The Economist that states: The impossible trinity (also known as the trilemma) is a concept in international economics which states that it is ...
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Is there any consensus on investment spending?

I know there is never a total consensus among economist but do economist on average want to see investment spending increase? I speaking from the perspective of someone in the US.
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1answer
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Will interest rates rise if a government runs a huge budget deficit?

My (very simple) logic is this: if government decides to spends a huge amount of money it does not have (meaning that it does not come from taxes) then it will borrow that money and thus create a lot ...
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1answer
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Is there an economic argument against mass immigration?

(I know little about economics, so I'd appreciate an elementary explanation) Background for this question is that I was wondering what makes people say China's economy will keep growing while its ...
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How is GDP growth interpreted? For example, what does 6% q/q saar mean?

For GDP growth or other economic data, I noticed that it's usually quoted in q/q (quarter over quarter), m/m (month over month), and y/y (year over year). I've also seen q/q saar. Using GDP as an ...
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Small Open Economy (SOE) Vs. Emerging Market Economy (EME)

In the graduate-level macro, I often see a Small Open Economy (SOE) setting, e.g., in the textbook of Gali. Yet when I read papers, authors sometimes use the term Emerging Market Economy (EME). I ...

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